What's behind volatility bet on MGM
An enormous trade is looking for volatility rise in shares of MGM Resorts.
More than 54,000 MGM options have traded today, already more than quadruple its full-sessioni average in the last month. Most of that volume is in one print in the February 13 puts.
A trader bought 40,000 of those contracts for the ask price of $0.37, according to optionMONSTER systems. The volume was about 4 times the previous open interest in the strike, so this is a new position.
Less than a minute later, a block of 1.88 million shares of MGM was bought for $13.0133. The combination of stock and options creates an overall delta-neutral position that is looking for a break from the stock's low volatility of late. The current 10-day historical volatility for MGM is 20 percent, near 52-week lows. (See our Education section)
MGM is flat on the session at $12.97 this afternoon. Shares of the casino operator have traded in an increasingly tight range around this $13 level in the last couple of weeks. The stock was down near $9 in mid-November.
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